§ Mr. HealeyThe increases in expenditure on pensions, food and housing will temper the impact of inflation and thus make a significant contribution to one side of the social contract on which the Government's whole policy is based. They will go some way to protect the standards of living of ordinary families, giving particular help to retirement pensioners, those with large and growing families, tenants in local authority and private accommodation, and all those sections of the community who are less well placed to protect themselves. They will help to maintain the value of the pay packet and to reduce the presssures for higher pay which are generated by rising prices and the fear that inflation will accelerate.
305 But all these measures have to be paid for, not just in money, but in resources, for they will rapidly increase demands on the nation's capacity for providing goods and services. If we are to help the less well off to have a higher standard of consumption than they would otherwise have been able to afford, the rest of us must be prepared to consume less. To the extent that consumption can be reduced by increases in saving, this will reduce the need for additional taxation.
I therefore turn to my proposals for national savings where the Government have a direct responsibility. I will not comment today on the recommendations of the Page Report. These require more consideration than I have been able to give in the last three weeks. However, without prejudice to our decisions on the Pare Report, I have decided to make the following immediate improvements in national savings facilities.
First, there will be a new National Savings Certificate, to be known as the Fourteenth Issue, offering a yield of 7.59 per cent. tax-free over four years. Secondly, there will be a new issue early in June of the British Savings Bond to replace the current issue. This will have an interest rate of 9½ per cent. and a 3 per cent. tax-free terminal bonus. Thirdly, by increasing the underlying interest rate, I propose to add some £500,000 a month to the amount available for distribution in premium bond prizes. Fourthly, I propose to introduce a new issue of Save-As-You-Earn contracts offering a gross return of 11.9 per cent. over five years and 12.6 per cent. over seven years. Finally, following recommendations in the Page Report, I propose to make certain smaller changes in the rules for deposits in the National Savings Bank. The Treasury will be announcing full details of all these proposals this afternoon, and copies of the Press notice will be available in the Vote Office.